E.I.R.STRATEGIC ALERT

E.I.R.STRATEGIC ALERT



WEEKLY NEWSLETTER

Volume 29, No. 24-25 - June 11, 2015

Foolish Western Leaders Rush into War

As the global financial crisis comes to a head over the Grexit issue, geopolitical schemes playing out in Central Europe and Asia have reinforced the central dynamic towards a global war. Blind G7 leaders, led by President Obama and Prime Minister Cameron, boosted this dynamic, by renewing their hostile policy to Russia.

In advance of the closing of the G7 meeting, the White House stated June 7 that “President Obama and Chancellor Merkel” agreed to extend sanctions against Russia until Moscow fulfills the provisions of the Minsk agreements. Meanwhile, the West is providing military assistance to Kiev, which has passed a law allowing foreign troops to fight alongside the Ukranian army on Ukrainian territory.

On June 6, Russian President Vladimir Putin stated that Moscow sees the Minsk 2 agreements as the only way for the solution in Ukraine, but that it is the Kiev government that is not fulfilling any of the provisions of the agreement and still refuses to accept the so-called separatists as a counterpart. Putin made those remarks in a long interview with Corriere della Sera, which was published in leading newspapers in Europe as well as on the Kremlin website in English (http://en.kremlin.ru/events/president/news/49629).

Putin also demanded an explanation as to why the European leaders who had mediated the deal between the Ukrainian government and the Maidan on Feb. 23, 2014, did not denounce what happened afterwards, when the violent faction on the Maidan ripped up that agreement and implemented the coup.

Putin also addressed overall relations with the EU. While Russia would favor a common economic space between the Eurasian Economic Union and Europe, he said, the EU wants to “build a new wall” between Russia and Eastern Europe.

Rather than answering the issues raised by the Russian President, G7 leaders continued to issue ultimatums. Obama called for “standing up to Russian aggression” as he arrived in Bavaria, while Angela Merkel told German television ZDF: “We should send a firm signal here. Not sanctions as an end to itself, but sanctions… to reach a target”.

At the same time, EU leaders, backed by Washington, are pushing confrontation with Greece in order to save the bankrupt euro financial system. As we have often written, what is at stake is not the tiny dimensions of the Greek debt per se, but the derivative Ponzi-scheme attached to it, and even more importantly, the political effect a “Grexit” would have, by establishing a precedent and changing the nature of the Monetary Union, from an “irreversible” system as Mario Draghi used to say, into a system that can lose pieces and ultimately dissolve. That means that the “safe” tag on euro-denominated assets is replaced by the “unsafe” tag, pulling the rug under the entire system.

Whatever the outcome of the EU-Greece negotiations is, the euro is ultimately finished. And for the trans-Atlantic system, the only way the oligarchs see, is war.

Angela Merkel’s Foreign Policy Comes under Strong Attack from Within

German Chancellor Merkel was hit with unusually sharp criticism last week, for her refusal to invite the Russian President Putin to the Group of Seven Summit in Bavaria. The critics include two former chancellors, Helmut Schmidt and Gerhard Schröder, the chairman of the influential Eastern Trades Board (Ostausschuss) of German industry Eckhard Cordes, the chairman of the German-Russian Forum Matthias Platzeck, and even her own Foreign Minister Frank-Walter Steinmeier.

The latter declared on June 4: “I believe we cannot have an interest in keeping the G7 format as a G7 format in the long term,” because “we urgently need Russia to help solve conflicts in our European vicinity and in Syria, Iraq, Libya and the Iranian nuclear program.” This is in clear dissent with Angela Merkel, who asserted in an interview with dpa the next day that, on grounds of “fundamental values” which she claimed Russia had “severely violated”, the right decision had been made not to invite the Putin back into the G7.

The vice-chairman of the SPD, Ralph Stegner, also criticized the exclusion of Putin from the G7 Summit in Germany. According to TASS, he said this is “not a meeting over a cup of coffee. If the Western countries have a desire to hold meetings only with those who share common values, then they will find it hard to assemble enough people even for the G2 format.”

Lyndon LaRouche, in comments June 6, underscored the strategic importance of the opposition to Merkel coming from these three SPD leaders, who recognize that her virulent anti-Russian policy, if not stopped, will lead to war, and very likely a thermonuclear war. Merkel should simply be removed from power, LaRouche said, especially since, at this point, Germany is the only country in Europe that could stop this war posture against Russia.

Also last week, Merkel suffered a major defeat on another front where she has stuck to Obama’s position, and that is Egypt. While she had refused to meet Egyptian President Al-

2

EIR STRATEGIC ALERT

WEEKLY NEWSLETTER

Sisi on so-called human rights grounds, due to heavy internal pressure, she was forced to receive him officially and to let him address a gathering of 180 German and 120 Egyptian industrial and engineering experts in Berlin.

The Egyptian President’s trip had been endorsed and prepared in close cooperation with German industrial leaders, by Merkel’s own Vice Chancellor and Economics Minister, Sigmar Gabriel, who had attended the international conference on Egyptian infrastructure projects in Sharm el-Sheikh in March (cf. SAS 13/15).

The most visible sign of the failure of Merkel’s hardline was the 10-billion-euro deal signed between Siemens and Egypt during Al-Sisi’s stay in Berlin. Siemens will build a huge gas power complex in Beni Suef, complete with 24 powerful turbines, and build 12 wind power parks in Egypt as well as a factory for the production of power machines.

The Siemens deal is seen as a door-opener for other industrial agreements for German technology sales for sea ports, railroads and other infrastructure projects planned. Indeed, industrialists are looking to gain a major share in the 60-bilion-euro development plan that Al-Sisi has put forth. Finally, cooperation with Egypt is also crucial for helping to stabilize Libya.

LaRouche: U.S. Presidential Campaign Offers Chance to Shape a New Presidency

Despite the persistent droning of pundits who assert that the 2016 U.S. Presidential election will be a face-off between Hillary Clinton and Jeb Bush, polls show a volatility, among likely voters, which foreshadows the possibility that a profound change will emerge long before the Nov. 2016 election -- if there is qualified leadership to direct it.

There are many “issues” which provoke strong reactions among voters, but underlying everything is a recognition that much of the political discussion in the U.S. is dishonest, designed to manipulate susceptible voters. This is especially clear when it comes to the economy.

Although the Obama administration and most media loudly proclaim that the U.S. economy has recovered from the 2008 crash, and is on a healthy, sustainable course, few Americans believe it. That is why Lyndon LaRouche, the most accurate economic forecaster of the last four decades, has been saying that there is a real chance that the election will be shaped by a campaign which focuses on “physical economy,” and attacks the free market, monetarist policies which have created yet another unsustainable speculative bubble. LaRouche has insisted that a candidate who takes on the corruption of Wall Street and the major banks will find a response among voters.

Within the Democratic Party, there is growing support for such a campaign, as exemplified by the number of co-sponsors to the House bill calling for reinstatement of Glass-Steagall, which has shot up to 59 over the past few weeks (four of them Republicans, including co-sponsor Walter Jones). As our readers know, there is one candidate who is publicly campaigning for Glass-Steagall, Martin O’Malley, who has been denouncing the “bullies of Wall Street” in his first round of campaign ads (cf. below).

His campaign is a visible indication of the splits in the Democratic Party, which have emerged over Obama’s support for the TPP free-trade deal, as well as over NSA spying and the undeclared wars the Obama administration is waging.

On the Republican side, while few candidates are in the real world on crucial strategic matters, Rand Paul took a decisive step by joining the bipartisan fight to release suppressed evidence of the Saudi role in the 9/11 terrorist attacks (cf. SAS 23/15). On June 5, Paul introduced the “Transparency for the Families of 9/11 Victims and Survivors Act of 2015”, as an amendment to the National Defense Authorization Act, with co-sponsors Ron Wyden and Kirsten Gillibrand, both Democrats.

LaRouche noted that this initiative in the Senate was “������a crucial flanking operation,” which contributes to removing Barack Obama from power.

LaRouche also insisted that the O’Malley campaign opens up the potentiality of organizing a new American presidency, by assembling a team of qualified individuals, many of whom have been excluded from any involvement in the official Executive branch over the last 15 years of Bush and Cheney, and now Obama. “O’Malley is going in that direction,” LaRouche said. “Hillary can’t make it. But one of the immediate priorities is to get rid of Obama.... Obama must be thrown out. That means O’Malley is... the emerging figure around which a new Presidency can be immediately assembled.”

O’Malley: Wall Street’s Nightmare That Won’t Go Away

The Political Action Committee supporting the Democratic presidential campaign of Martin O’Malley has put out a new television ad titled “Wall Street’s Public Enemy No. 1.”

The ad quotes from O’Malley’s May 30 speech announcing his candidacy where he stated boldy: “Goldman Sachs is one of the biggest repeat-offending investment banks in America. Recently, the CEO of Goldman Sachs let his employees know that he’d be just fine with either [Jeb] Bush or [Hillary] Clinton. Well, I’ve got news for the bullies of Wall Street -- the presidency is not a crown to be passed back and forth by you between two royal families. It is a sacred trust.”

That quote in particular was the basis of commentaries by Fox Business News reporter Charles Gasparino, June 2 and 3. “Martin O’Malley is now like, I would say, persona non grata, public enemy number-one in in the halls of Goldman Sachs, in the halls of Black Rock, the big money management firm; all throughout Wall Street right now,” said Gasparino June 2. “O’Malley is the last person Wall Street would want to win. The financial industry was not expecting a presidential candidate to adopt that kind of aggressive approach towards Wall Street. Right now, people on Wall Street are talking about Martin O’Malley.... What they’re really worried about is not that he’s going to win. It’s that he’s going to force [Hillary Clinton] so far to the left with that resonating message.

Lyndon LaRouche, who has named O’Malley “the only qualified candidate in the race thus far,” said it reminded him of Franklin Roosevelt, who told audiences about Wall Street, “They hate me, and I welcome their hatred.”

And in fact, as Business Insider June 3, “Martin O’Malley is happy to be ‘the last person’ Wall Street CEOs want running in 2016.”

Danish Elections: The Friends of The Schiller Institute Shake Up “Politics as Usual”

On May 27, Prime Minister Helle Thorning-Schmidt (Social Democrat) called parliamentary elections, to be held on June 18 -- the usual length of Danish elections campaigns. According to Danish law, parliamentary elections must be called within four years of the last election, at the prerogative of the prime minister, in this case, by September 2015.

While neither of the two election blocks (right-wing opposition and left-wing government and support parties) have anywhere near the policy perspective needed to navigate the ship of state through the accelerating economic and strategic

n°24-25 / 2015

3

EIR STRATEGIC ALERT

WEEKLY NEWSLETTER

dangers, four independent campaigns have been creating a stir. The candidates are Tom Gillesberg, the chairman of The Schiller Institute in Denmark who is running in Copenhagen, and three other activists from The Friends of The Schiller Institute.

The focus of their campaign is to get Denmark and the rest of Europe to join the BRICS economic development alliance, as encapsulated in their now-famous poster with the slogan, “Win-win with BRICS: Not collapse and war”, and a picture of the World Land-Bridge (www.sive.dk). Both the newspaper Jyllands Posten and TV2 channel presented that poster as among the most special of the campaign.

Gillesberg has received some short media coverage, including the above two outlets, as well as the most well-known radio news analysis program Orientation, and on the nationwide DR2 TV program Deadline, where he could outline the perspective of the world land-bridge presented on the poster. That short intervention prompted the host to close with: “Now illuminated, and perhaps inspired, we say thank you for watching.”

On June 4, one of the three leading newspapers Politiken published both in their online and printed editions, a lengthy interview with Gillesberg, headlined: “He Is Running a Campaign Based on the Danger of Nuclear War.” The kicker reads: “During the 2007 election, Tom Gillesberg predicted the financial crash. And, as is known, he was right. Now he is warning that things can go terribly wrong, if we don’t cooperate with Russia and China.”

With ironic twists throughout on how few votes Gillesberg received in previous elections, the article nonetheless goes through the dangers of a financial crash and nuclear war, as well as Gillesberg’s solutions, such as joining the BRICS, Glass-Steagall bank separation, and the importance of large infrastructure projects, such as the Danish maglev across the Kattegat to link the two major cities, Copenhagen and Aarhus.

All in all, the campaigns of the activists of the SI, while limited, have brought some reality, and optimism, into the humdrum of failed European policies. As of this writing, the two major blocks, are running neck and neck to get to the 90 mandate finish-line needed to form a majority government.

Washington Readies Various Options for War on China

Over the past weeks, U.S. President Obama, his Defense Secretary Ashton Carter and other American officials have unleashed a tirade against Chinese “aggression” in the Spratly/Nansha Islands in the South China Sea, a tirade which has been duly taken up in major European media (cf. SAS 23/15).

In fact, while the reefs in the area are disputed by many countries, China has been using those it claims are Chinese to create several artificial islands to be used for its trade routes, as have other claimants.

Even the Wall Street Journal, which has been in the lead of the calls for a tough stance against China, had to admit in the June 1 issue that “China’s island-building doesn’t violate maritime law, and other claimants to the Spratlys, including Taiwan, Vietnam and the Philippines, have all expanded the geographical features they control, albeit not nearly as dramatically. Nor has China threatened shipping in the South China Sea, which carries more than half the world’s trade. And although the U.S. accuses China of militarizing the islands, so far it has identified only two light motorized artillery pieces on one of them.”

In fact, as Helga Zepp-LaRouche pointed out in a recent speech, the many reefs in the South China Sea that are now hotly disputed are essentially the result of the geopolitics imposed by the major powers in the aftermath of World War I and then again of World War II, which deliberately left many territories without owners. In that way, they could constantly be used as a pretext for conflict when it was deemed useful.

In fact, as Global Times pointed out, more reefs and islands have been occupied by the Philippines (U.S. allies) than those under the control of China.

Despite this historical reality, Obama’s Defense Secretary Ashton Carter has again accused China of violating “international norms” in the Asia-Pacific, adding that the U.S. will continue provocative military fly-overs of the Chinese islands. Then – believe it or not – he boldly asserted that America “will remain the principal security power in the Asia-Pacific for decades to come.”

Those are not just empty words. The United States is proceeding with a massive military encirclement of China, which includes: new high altitude missile systems and radar in Japan and perhaps in Korea; intentions to place modern air, sea and land military forces in eight bases on Philippine soil, including two on Palawan island in the South China Sea; the “pivot” which intends to place both more and more sophisticated military hardware in a ring around China and Russia in the Pacific.

Under the official U.S. military doctrine in the Pacific (“Air-Sea Battle”), if Washington deems that China is attempting to exclude the US from the South China Sea, the response will be a full-scale first strike on the Chinese mainland.

Iran Escalates Fight against Saudi-Backed ISIS and Jihadists

The analysis presented in the Strategic Alert last week has been confirmed by events in the Middle East and elsewhere, as provocations and frantic diplomacy compete with each other. American, British and Saudi media pushed a story on the evening of June 4, stating that Iran has sent 10,000 armed men from the Iranian revolutionary Guard (IRCS) and Iraqi shia militias to defend Damascus and Lathakia in Syria, against an approaching offensive by the Saudi-Turkish backed Islamic militants. The same wires highlighted an unconfirmed statement by Qasem Soleimani, commander of the IRGC’s Quds Brigades saying from Lathakia, that Iran is “preparing a major surprise in Syria”. Although these unconfirmed statements could be just provocations to foster rage against Iran, the Syrian government and the Iraqi Shias, they fit into the pattern of Iran losing patience with the West’s failure to act against the barbarous extremists.

Simultaneously, the Iran-allied Hizbolah of Lebanon started a major offensive on the city of Irsal on the Lebanese side of the border with Syria, which terrorist groups like Al-Qaeda’s Jabhat Al-Nusra and ISIS have been using as a logistical base to attack the Syrian army. This has heightened the already simmering sectarian tension in Lebanon, as Irsal is a Sunni city and has been protected by pro-Saudi forces in Lebanon such aas the Al-Hariri family and its political arm in the country, the Mustaqbal party.

Recent statements made by the Russian Foreign Minister Sergei Lavrov and by the Iranian Supreme Leader’s foreign policy adviser, Ali Velayeti, point to the fact that both Iran and Russia are committed to supporting the Syrian and Iraqi governments to fight ISIS and what they openly describe as Western-backed and Saudi-backed terrorist and militant groups. These two countries, as we wrote, are in favor of a new international coalition against ISIS and Islamic terrorism, but on completely different terms than the fake U.S.-British-French-Saudi coalition that has prolonged and strengthened the Islamic terrorist groups in Syria and Iraq, intentionally and otherwise.

n°24-25 / 2015EIR STRATEGIC ALERT WEEKLY NEWSLETTER 4

That coalition held a meeting last week in Paris to discuss the strategy against ISIS, but did not even invite Iran and Russia to participate. Lavrov insisted, in an interview with Bloomberg, that Russia was in favor a fighting the extremists “on a collective basis, on the basis of international law, through the Security Council.” The Americans, however, announced their own coalition, on their conditions, specifying that they would carry out air-strikes in Syria, without asking the Syrian government or the Security Council.

However, there has been some cooperation among Russia, Iran and U.S. State Department officials on easing the tensions in Yemen, and sponsoring a new national dialog to end the murderous but failed Saudi aggression against the people of Yemen that has continued since March 26 (cf. SAS 14, 17/15).

Bringing the U.S. and Russia into a closer cooperation which would be key to ending the nightmare in the whole Southwest Asian region.

Nuclear Energy: Over Half of New Power Plants Are in the BRICS

Over the past 50 years, almost the entirety of the world’s nuclear power plants have been built by, and operated in, the advanced industrial nations. But a dramatic global paradigm-shift has taken place over the past 12 months, as reflected in the 7th ATOMEXPO conference, held from June 1-3 in Moscow.

At the six previous exhibitions, Russia’s nuclear company Rosatom showcased nuclear technology, and negotiated agreements and contracts with international partners, most often with its traditional partners in Eastern Europe and the former Soviet Republics. This year’s conference however, on the theme “Nuclear Power as an Impulse for Socio-Economic Development, “ focussed on Russian cooperation with Ibero-America, Pacific Asia, and Africa.

That the BRICS today are the global driver for nuclear power became clear to all. “Forty out of 76 nuclear power plants under construction are in BRICS,” Aleksey Khokhlov of the Russian PwC Strategy and Services in Russia pointed out. “In 15 years time, BRICS nations would be the main driver for economic growth. These countries are energy intensive,” he told the approximately 2,000 delegates from 48 nations attending the conference.

A myriad of other countries are aligning themselves with the BRICS perspective of driving economic development with the most advanced technologies.

The head of Argentina’s delegation, Minister for Planning Julio De Vido, described the importance of nuclear energy for his nation, and announced that while Argentina has spent $11 billion on its nuclear plan between 2003 and 2014, it plans to triple that over the next decade, to reach $31 billion. (By contrast, the German delegate noted that consumers and industry in Germany were paying EU23 billion to subsidize renewables, and that this has made it hard to manage the stability of the power grid!)

Russia has been in the forefront of providing a range of financing options to new nuclear nations, making it possible for them to commit to large investments in the future. Deputy Director of international business development for Rosatom, Kirill Komarov, reported at ATOMEXPO that Russia’s current order book of over $100 billion for 29 nuclear orders overseas is expected to grow to $150 billion by 2020.

Toward that goal, numerous agreements were signed by Rosatom during the exhibition, including:

*a Memorandum of Understanding with Tunisia, for using radioisotopes in industry, medicine, and agriculture, and the training of specialists;

*the strengthening of cooperation with Indonesia, with which Rosatom is building a 10-MW experimental high-temperature gas-cooled research reactor;

*an agreement with Ghana, including the construction of research reactors;

*a discussion with Cuba’s science minister, Elba Rosa Perez, regarding collaboration and the exchange of nuclear scientific data with Russia.

China Announces up to Six Corridors

in the One Belt, One Road Initiative

The Chinese leadership is outlining a breath-taking scope of great projects for increasing the economic platform of over 60 countries in the framework of the One Belt, One Road Initiative. According to the May 28 China Daily, Vice Premier Zhang Gaoli announced that Beijing is considering six different corridors to better connect Asia and Europe, and the many countries lying along and between the routes.

The announcement by Zhang was made one day earlier at the opening ceremony of a two-day conference of the Asia-Europe Meeting (ASEM) held in Chongqing, under the title, “Industry Dialogue on Connectivity”. The ASEM represents 53 European and Asian nations and organizations.

The six major economic corridors that China is considering developing, Zhang said are:

* China-Mongolia-Russia;

* New Eurasian Land Bridge;

* China-Central Asia-Western Asia;

* China-Indochina Peninsula;

* China-Pakistan;

* Bangladesh-China-India-Myanmar.

These corridors would vector in several directions and bring about a tremendous economic transformation. According to the article, the Asian Infrastructure Investment Bank and the New Silk Road Fund, which are being brought into being, will be tapped as the source of funding. Apparently, the AIIB would deploy a multiple of its capital for the funding.

China’s trade volume in goods with the countries along the designated routes, many of which are developing countries, has been growing at an average of 22% each year since 2001.

Moreover, the China Development Bank has also made known that it would invest more than $890 billion into more than 900 projects involving 60 countries, as part of its efforts to bolster the initiative.

Note to Subscribers

The Strategic Alert will not be published next week, as the editorial board will be participating in an internationalSchiller Institute conference in Paris.

E.I.R. STRATEGIC ALERT www.eir.de

Published by: E.I.R.GmbH, Bahnstr. 9a, 65205 Wiesbaden

Tel.: 0611/73650, Fax: 0611/7365101, Email: eirna@eirna.com

Verantwortl. f. d. Inhalt: Dean Andromidas, Claudio Celani

Subscription: EUR 3000/ ISSN 0936-7527

© E.I.R. GmbH Alle Rechte vorbehalten, auch die des Nachdrucks

von Auszügen, derphotomechanischen Wiedergabe und der Übersetzung,

Printed in Germany

n°24-25 / 2015